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TMI Blog2023 (10) TMI 1190X X X X Extracts X X X X X X X X Extracts X X X X ..... of scrap machinery account for the month of March 2011 which in the format of MM-DD-YYYY, wrongly interpreted as 03/05/2011 instead of 05/03/2011 . Considering the fact that sale proceedings are duly accounted for in the books of account and fixed deposits have been made out of the sale proceeding, the finding of the A.O. that the sales are made in the next financial year has been rightly negated by the CIT(A). No error or infirmity in the order of the CIT(A) in deleting the addition, accordingly, we dismiss the Ground No. 1 of the Revenue. Suppression of sales - Addition being margin sales out of books on the basis of consumption of electricity and powder consumed during the year in the manufacturing process - A.O. observed that no raw material (Powder) was issued in the month of February and March 2011, whereas consumption of electrical unit is shown in the respective month and no production of cabinets was shown - CIT(A) deleted the addition - HELD THAT:- As per the record, the assessee had production 4083 unit of cabinets for which no material could have been issued as the materials/powder was supplied by the customer for manufacture of cabinet on job work. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order u/s 143(3) of the Act was passed on 24/03/2014 assessing the income at Rs. 3,05,86,225/- by reducing the carry forward business loss and unabsorbed depreciation to Rs. 44,16,806/-, disallowed of Rs. 36,19,181/- u/s 36(1)(iii) of the Act, addition of Rs. 34,60,000/- made on account of purchases not included in the closing stock/sales, disallowance of Rs. 4,38,165/- out of expenses for non business purpose and Rs. 3,49,08,598/- on account of margin on sales out off books cabinet on an estimate basis. 4. Aggrieved by the assessment order 24/03/2014, the assessee preferred an Appeal before the CIT(A), the Ld. CIT(A) vide order dated 14/12/2016, deleted the addition of Rs. 34,60,000/- made on account of purchase not included in closing stock/sales, deleted the addition of Rs. 3,49,08,598/- which was made on account of suppression of sales. Aggrieved by the order of the CIT(A) dated 14/12/2016, the Department of Revenue preferred the present Appeal on the grounds mentioned above. 5. Ground No. 1 is regarding deletion of addition of Rs. 34,60,000/-which was made by the A.O. on the ground that the assessee had inflated its purchase by showing sale of scrap machinery. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d No. 1 of the Revenue is deserves to be dismissed as meritless. 8. We have heard both the parties and perused the material available on record. The Ld. A.O. made addition of Rs. 34,60,000/- on the ground that the assessee had inflated its purchase by showing scrap machinery without corresponding sales or inventory. The said addition has been deleted by the CIT(A) in following manners:- 7.2. I have carefully considered the finding of the AO and written submissions filed by the Ld. AR. The AO added a sum of Rs. 34,60,000/- to the closing stock of the appellant as items included in purchases but neither sold during the year nor included in the list of inventory (closing stock). The Ld. AR has submitted that scrap machinery of Rs. 34,60,000/- lying in the Noida Unit of the appellant, was transferred to Kirti Nagar Unit during the period 07.05.2010 to 09.11.2010. Accordingly, in the books of the Noida Unit the said machinery has been excluded from the schedule of assets and was included as purchases in the Kirti Nagar Unit. During the year itself, the scrap machinery has been sold to one M/s Shri Mahalaxmi Plywood Industries for Rs. 46,98,000/-, as is evident from the sale invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are made in the next financial year has been rightly negated by the CIT(A). Thus, we find no error or infirmity in the order of the CIT(A) in deleting the addition, accordingly, we dismiss the Ground No. 1 of the Revenue. 10. Ground No. 2 of the Revenue is regarding deletion of addition of Rs. 3,49,08,599/- made on suppression of sales. The Ld. A.O. made the said addition being margin sales out of books on the basis of consumption of electricity and powder consumed during the year in the manufacturing process. The Ld. A.O. further observed that no raw material (Powder) was issued in the month of February and March 2011, whereas consumption of electrical unit is shown in the respective month and no production of cabinets was shown. During the Appellate Proceedings, the ld. CIT(A) deleted the addition in following manners:- 9.2. I have carefully considered the finding of the AO, written submission filed by the Ld AR, Remand Report of the AO and the Rejoinder to the Remand Report. The AO added a sum of Rs. 3,49.08.598/- being margin on sales out of books on the basis of consumption of electricity and powder consumed during the year in the manufacturing process. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, there cannot be one-to-one co-relation between electricity consumed vis- -vis production of cabinet. By taking us through the paper book and the documents produced in the Paper Book, the Ld. Assessee's Representative relied on the various judicial pronouncements in support of her contention and submitted that the additions have been righty deleted by the CIT(A) which requires no interference at the hands of the Tribunal. 13. We have heard both the parties and perused the material available on record. The reason for making the addition by the A.O. that no material (powder) was issued in the month of February and March 2011 whereas consumption of electrical unit is shown in the respective month, but no production of cabinet is shown. As per the record, the assessee had production 4083 unit of cabinets for which no material could have been issued as the materials/powder was supplied by the customer for manufacture of cabinet on job work. The assessee had also furnished detailed reconciliation statement wherein the difference in terms of unit of electricity consumed as recorded by the A.O. was duly reconciled. The CIT(A) also found that the main reason for variance is t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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